Makalot Industrial Co (聚陽), a manufacturer of ready-to-wear apparel and functional clothing, yesterday posted about a 15 percent annual increase in pretax profit for the first nine months of this year, benefiting from clients shifting manufacturing sites away from China amid the country’s escalating trade war with the US.
Pretax profit jumped to NT$1.45 billion (US$46.86 million) during the January-to-September period from NT$1.26 billion a year earlier, the company said in a filing with the Taiwan Stock Exchange.
However, consolidated revenue inched up only 0.38 percent annually to NT$17.14 billion from NT$17.08 billion.
“Since April-May, we have seen an influx of new orders from apparel vendors, who are seeking to evade the US tariffs by seeking new manufacturing support outside China,” a Makalot official said by telephone.
“Customers’ orders greatly surpassed our capacity, which gave us bigger bargaining power in pricing. That explains why our growth in pretax profits have outpaced our revenue growth in the January-September period,” said the official, who spoke on condition of anonymity.
Makalot, whose major customers include Kohl’s Corp and Target Corp, opted for higher-margin clothing orders and gave up lower-margin ones due to tight capacity, he said.
The Taipei-headquartered firm this year plans to boost capacity by 10 percent from last year, the official said.
The company expects annual growth in revenue and pretax profit to accelerate this quarter from last quarter, he said.
Revenue last quarter climbed 10.26 percent annually to NT$7.63 billion, while pretax profit jumped 20.7 percent, Makalot said.
“The growth momentum is much better than what we expected at the beginning of this year,” the official said.
Makalot had previously forecast an annual revenue growth of 10 percent for this year.
The company expects the growth momentum to carry into the first quarter of next year, the official said.
“The outlook is quite resilient. We are seeing good momentum in orders. We are looking forward to a good” financial performance, he said.
More than 90 percent of Makalot’s products are made outside of China.
Its plant in Vietnam is its most important production base, making up 40 percent of its total output, while its plants in Indonesia and Cambodia make up 30 percent and 20 percent respectively, Makalot said.
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